Jeweller sees gold price on 'the uptrend'

KUALA LUMPUR: Poh Kong Holdings Bhd
expects the price of gold to hold up this year as demand stays
resilient, said its head of corporate affairs, administration and human
resources Margaret Hon.
“The gold price will look choppy in 2012. It is lower now, but moving forward, we foresee it will be on the uptrend.
“Last
year, we predicted gold would rise to US$2,000 per ounce, but it peaked
at US$1,900 per ounce on Sept 5,” Hon said after the company's AGM.
Executive chairman and group managing director Datuk Choon Yee Seiong
said a crucial factor that could influence gold prices was whether the
conflict in Iran escalated, which could push up prices by some 30%.
[You must be registered and logged in to see this image.] Executive
chairman and group managing director Datuk Choon Yee Seiong(pic) said a
crucial factor that could influence gold prices was whether the
conflict in Iran escalated, which could push up prices by some 30%.
Iran
has threatened to shut down shipping lines on the Strait of Hormuz, a
key route for oil, in response to Western sanctions on its oil exports.
Gold is seen as a safe haven in times of crisis. Prices shot up to a nominal all-time highin 2011 when global equity markets suffered a rout at the height of the eurozone debt crisis.
As at 6pm yesterday, spot gold was up 0.82% to US$1,624.4 an ounce.
Hon said even though gold prices were at record highs last year, it did not discourage demand from investors.
“Demand for gold globally is still on an upward trend. There is potential for us to perform,” she said.
Asked
how Poh Kong mitigated the surge in gold prices on its bottom line, Hon
explained that its margins depended more on its stock holdings.
“If we have gold stocks at a lower cost, we can enjoy higher margins until the stocks regularise themselves,” she said.
The
company's inventory of gold, diamonds and gemstones increased to
RM443.7mil in the financial year ended July 31, 2011 versus RM383.6mil a
year earlier.
Choon said the jeweller, which would open its
101st store in Ipoh's Aeon Station 18 shopping centre in March, had
ruled out overseas ventures this year.
On the progress of the
group-wide restructuring, she said Poh Kong would wind up its non-key
subsidiaries and consolidate all retail outlets under Poh Kong Jewellers Sdn Bhd.
In
2011, the company proposed to take up Islamic debt papers totalling
RM150mil, with RM50mil to be spent on new branches and manufacturing
equipment and RM100mil for the restructuring.
Hon said the
restructuring, which could take three to five years, would bring down
the costs of its subsidiaries, but declined to put a number on the
expected savings as it has just commenced.
For its first quarter
ended Oct 31, 2011, revenue climbed 36.11% to RM230.65mil from RM169.45
previously, while net profit rose 62.82% toRM17.72mil from RM10.89mil, bolstered by higher gold prices and sales.
Poh Kong ended unchanged at 44.5 sen with 597,500 shares changing hands.